Exports and Financial Shocks

David Weinstein and Mary Amiti

No 7590, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A striking feature of many financial crises is the collapse of exports relative to output. In the 2008 financial crisis, real world exports plunged 17 percent while GDP fell 5 percent. This paper examines whether the drying up of trade finance can help explain the large drops in exports relative to output. This paper is the first to establish a causal link between the health of banks providing trade finance and growth in a firm?s exports relative to its domestic sales. We overcome measurement and endogeneity issues by using a unique data set, covering the Japanese financial crises of the 1990s, which enables us to match exporters with the main bank that provides them with trade finance. Our point estimates are economically and statistically significant, suggesting that trade finance accounts for about one-third of the decline in Japanese exports in the financial crises of the 1990s.

Keywords: Exports; Financial shocks; Financial crisis; Trade finance; Japan (search for similar items in EconPapers)
JEL-codes: E32 E44 F40 G21 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-int and nep-mac
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Citations: View citations in EconPapers (89)

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Related works:
Journal Article: Exports and Financial Shocks (2011)
Working Paper: Exports and Financial Shocks (2009)
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